Bank of America Hit with Third-Largest Penalty in U.S. Department of the Treasury History for Failing to Timely Report Over $5 Billion in Suspicious Transactions, Including Chinese Money Laundering Network Deals

WASHINGTON

Bank of America, the second-largest bank in the United States, has faced sanctions from the U.S. Department of the Treasury after failing to timely report more than $5 billion in suspicious transactions to FinCEN. More than $1 billion of these transactions involved priority national security risks, including Chinese Money Laundering Networks and illicit funds along the southwest border, the Treasury Department stated. In a press release issued on October 13 (U.S. time), the Treasury Department announced that these actions represent the third-largest penalty in Treasury history and include the largest penalty in the history of the OCC.

FinCEN Stated Over $5 Billion in Suspicious Transactions Went Unreported, Including Chinese Money Laundering Network Dealings

FinCEN assessed a $1.2 billion penalty against Bank of America. The Treasury Department stated that the bank failed to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit funds along the southwest border. According to FinCEN's investigation, the bank failed to timely file Suspicious Activity Reports (SARs) and did not fulfill its customer due diligence obligations regarding correspondent accounts for foreign financial institutions. Nor did it operate an anti-money laundering program meeting the minimum requirements of the Bank Secrecy Act (BSA).

As a result, the Treasury Department stated that the bank filed late reports to FinCEN on more than $5 billion in suspicious transactions. More than $1 billion of these transactions fell under priority illicit finance risks related to national security. The Treasury Department stated that these included Chinese Money Laundering Networks, fraud, and transactions with potential trade-based money laundering tied to the southwest border.

In its settlement with FinCEN, Bank of America admitted to willfully violating the Bank Secrecy Act. The Treasury Department stated that this admission was part of the settlement agreement resolving the case with FinCEN.

Treasury Pointed Out Bank Prioritized Revenue and Cut Compliance Resources

The Treasury Department stated that even after issues arose, Bank of America prioritized revenue and minimized the impact on necessary compliance resources. The Treasury Department determined that the bank relied on law enforcement inquiries and requests from other financial institutions rather than automated controls to detect suspicious transactions on its own, effectively offloading a significant portion of its proactive detection and reporting obligations to third parties. The bank allowed suspicious activity to languish uninvestigated for extended periods, resulting in delayed filings that offered little utility to law enforcement, the Treasury Department said.

The Treasury Department pointed out that the bank failed to take meaningful action even when internal reviews revealed serious problems. The bank's Customer Due Diligence (CDD) procedures failed to account for customers heavily reliant on payments from unknown third parties. Red flags accumulated, including potential links to drug trafficking proceeds, and even after compliance personnel escalated concerns over potential trade-based money laundering and fraud to senior leadership, the bank failed to respond in a timely and meaningful manner, the Treasury Department said.

FinCEN's Consent Order requires the bank to conduct a lookback of past transactions alongside a third party and report any missed suspicious transactions to FinCEN. The bank must also undergo an independent review of the effectiveness of its suspicious activity monitoring, customer due diligence, and foreign correspondent banking due diligence programs, as well as the data governance frameworks used for its anti-money laundering operations. This review evaluates the bank's ability to address priority risks involving the southwest border, cartels, potential narcotics trafficking, Iran, and Russia.

On the same day, the Treasury Department also announced concurrent actions by the OCC and OFAC.

OCC Stated Bank Failed to Remediate Deficiencies Even After 2024 Cease-and-Desist Order

The OCC assessed a $750 million civil money penalty, the largest in OCC history. The penalty was imposed for violations of the Bank Secrecy Act and its implementing regulations (12 C.F.R. §§ 21.21 and 21.11). The bank was also subject to a cease-and-desist order issued in December 2024 (the 2024 Order), which required the bank to remediate deficiencies in its anti-money laundering compliance program.

However, the OCC determined that the bank's program remained deficient and ineffective. The transaction monitoring system failed to properly monitor trillions of dollars in transactions, resulting in massive late filings involving billions of dollars, according to the Treasury Department. Many of these late filings showed indicators of money laundering. The Treasury Department stated that the bank had known for years about issues with failing to escalate suspicious activity to its investigative unit, yet failed to correct them.

The Treasury Department also cited staffing issues as part of the OCC's findings. The bank's BSA officer and staff lacked the skills and expertise to operate the program effectively. Key personnel lacked adequate training in identifying, investigating, and reporting suspicious activity, leading to inaccurate and delayed reports. The audit department also failed to catch long-standing issues that examiners subsequently identified, the Treasury Department stated.

Even after agreeing to the 2024 Order, the bank failed to prioritize compliance, the Treasury Department stated. It failed to complete many of the critical steps necessary to establish an effective program. For more than a year following the order, failures to escalate suspicious activity to the investigative unit persisted, and structural gaps in transaction monitoring led to the processing of transactions with potential trade-based money laundering.

OCC Re-Listed the Penalty in Its Monthly Enforcement Action Announcement on October 22

In its October 22 announcement of "Enforcement Actions for October 2026" (News Release 2026-93), the OCC listed the Bank of America action, citing deficiencies in its BSA compliance program, delinquent filing of SARs, and processing funds transfers with inaccurate originator name information as grounds for the $750 million civil money penalty. The case number is AA-ENF-2026-41.

In a separate press release on October 13 (2026-89), the OCC stated that the OCC's $750 million assessment is credited toward FinCEN's $1.2 billion penalty, and the penalty assessed by the OCC is paid to the Treasury Department. In its October 13 press release, the Treasury Department referred to the combined actions of the three agencies as "more than $1.21 billion in penalties."

Comptroller of the Currency Jonathan Gould stated in the October 13 press release that the bank processes hundreds of trillions of dollars in transactions annually and faces high and growing money laundering risks. Gould said, "Nearly two years ago, the bank signed an order with the OCC promising to fix its BSA deficiencies," adding, "The bank’s deficient response to those deficiencies is unacceptable."

Apart from the OCC's findings, the Office of Foreign Assets Control (OFAC) also took issue with the bank's sanctions compliance.

OFAC Settled 475 Apparent Sanctions Violations for $11.6 Million

OFAC announced that it settled Bank of America's potential civil liability for 475 apparent violations of multiple sanctions programs for $11.6 million. The apparent violations arose under sanctions programs targeting Russia, Belarus, Iran, Myanmar, Somalia, narcotics trafficking, and global terrorism. At issue was the bank's processing of millions of dollars in payments.

OFAC highlighted four instances: routing correspondent banking payments through sanctioned banks due to technical and human errors; poorly configured sanctions screening alerts that allowed payments and withdrawals by designated entities; failing to promptly update screening watchlists following OFAC designations; and mishandling a corporate account associated with a sanctioned entity due to human error.

OFAC determined that these apparent violations were non-egregious and largely not voluntarily self-disclosed. The settlement amount reflected no reduction from the base penalty, nor any mitigation for remediation or cooperation. The bank entered into compliance commitments regarding training, testing and auditing, and ongoing communication and cooperation with OFAC.

The Treasury Department stated that inquiries from law enforcement or reports from other financial institutions cannot serve as a substitute for internal controls, nor can accumulating red flags and internal warnings be ignored. The Treasury Department stressed that innovation cannot be used as an excuse either. Simply documenting problems or prolonging internal reviews without corrective action does not fulfill compliance obligations, the Treasury Department added.

Secretary of the Treasury Scott Bessent stated, "When a bank of this size fails to meet its anti-money laundering and sanctions obligations, the consequences spill beyond the bank and expose the entire U.S. financial system to significant illicit finance risks." Bessent said, "Today's action sends a clear message that not even the largest financial institutions are above the law." The Treasury Department noted that FinCEN also operates a whistleblower incentive program that can award individuals who provide information on BSA violations, and is currently accepting tips. Tips that lead to successful enforcement actions resulting in monetary penalties exceeding $1 million may qualify for an award.

Sources (KST)

• U.S. Department of the Treasury, "U.S. Treasury Announces Record Enforcement Actions Against Bank of America" (October 13, 2026): https://home.treasury.gov/news/press-releases/sb0657
• U.S. Department of the Treasury X post: https://x.com/USTreasury/status/2110145093889896620
• Office of the Comptroller of the Currency (OCC) X post: https://x.com/USOCC/status/2110106316001939783
• Office of the Comptroller of the Currency (OCC), News Release 2026-89 "OCC Imposes $750 Million Assessment Against Bank of America for Deficient BSA/AML Compliance" (October 13, 2026): https://www.occ.gov/news-issuances/news-releases/2026/nr-occ-2026-89.html
• Office of the Comptroller of the Currency (OCC), News Release 2026-93 "OCC Announces Enforcement Actions for October 2026" (October 22, 2026): https://www.occ.gov/news-issuances/news-releases/2026/nr-occ-2026-93.html
• U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) Settlement Notice (October 13, 2026): https://ofac.treasury.gov/recent-actions/20261013_33